ST Posts Higher Year-on-Year Revenue and Profits for 1Q2019

FINANCIAL HIGHLIGHTS For the first quarter ended 31 March 2019

2019 2018 Change 1Q 1Q %

Revenue ($m) 1,731 1,647 5

Earnings before interest and tax (EBIT) 141.9 122.1 16 ($m)

Other income, net ($m) 10.2 8.6 18

Finance costs, net ($m) (0.9) (2.2) 58

Profit before tax (PBT) ($m) 159.9 144.0 11

Profit attributable to shareholders 131.1 117.7 11 (Net Profit) ($m)

Earnings per share (cents) 4.20 3.78 11

 Order book of $14.1b at end March 2019, of which about $4.2b is expected to be delivered in the remaining months of 2019  Commercial sales and defence sales constituted 70% or $1.2b and 30% or $0.5b respectively  Cash and cash equivalents of $0.6b N.B.: All currencies are in dollars

Page 1

Singapore Technologies Engineering Ltd ST Engineering Hub, 1 Ang Mo Kio Electronics Park Road #07‐01, Singapore 567710 T: (65) 6722 1818 F: (65) 6720 2293 (Regn. No.: 199706274H)

Singapore, 15 May 2019 - Singapore Technologies Engineering Ltd (ST Engineering) today reported that it achieved higher year-on-year (y-o-y) revenue and profits for its first quarter ended 31 March 2019 (1Q2019). Compared to a year ago, Group revenue increased 5% to $1.73b from $1.65b, and Profit before tax (PBT) of $159.9m was 11% higher from $144.0m and Profit attributable to shareholders (Net Profit) was $131.1m, up 11% from $117.7m.

At the business sector level, revenue for the Aerospace sector increased 4% y-o-y to $622m from $599m, and Net Profit was up 6% y-o-y to $62.7m from $59.2m. Revenue for the Electronics sector was $563m, down 7% from its high base a year ago in 1Q2018 which was a strong quarter with 22% y-o-y growth. Notwithstanding the lower revenue, its Net Profit was up 8% y-o-y to $43.4m from $40.3m due to favourable sales mix. Revenue for the Land Systems sector was up 34% to $377m from $281m the year before, driven by broad-based growth across its business groups, and its Net Profit dropped 3% y-o-y to $15.2m from $15.6m mainly due to the absence of a favourable tax finalisation adjustment. The Marine sector’s revenue was flat at $149m and its Net Profit grew 38% y-o-y to $12.0m from $8.7m largely due to improved U.S. performance.

“We had a good start to the year and our recent contract wins have increased our order book to a high of $14.1b. Our focus remains on strengthening our core businesses and pursuing growth in Smart City and in the international defence business.

On the M&A front, we have agreed to acquire Newtec Groupi, which operates in the high-tech satellite communications industry driving connectivity. This acquisition is expected to complete in 2H2019, and when combined with our existing satellite communications businesses, will further enhance our value proposition for Smart City.” Vincent Chong, President & CEO, ST Engineering

Revenue split between Commercial and Defence sales for 1Q2019 was 70%:30%. The Group ended the quarter with $0.6b cash and cash equivalents.

Page 2

New Order Book Record and Contracts Wins in 1Q2019 As at 31 March 2019, the Group’s order book stood at a high of $14.1b, of which $4.2b is expected to be delivered in the remaining months of 2019.

The Group announced a combined value of $2.1b new contracts for the Aerospace and Electronics sectors. $1.3b was from the Aerospace sector for services ranging from a 10-year heavy maintenance support for a major North American operator’s entire fleet of A300s and Boeing 757 and component support for new African and European airline customers. The Electronics sector received $818m worth of contracts from global customers for its mobility, satellite communications, Internet of Things, cybersecurity, public safety and security, and defence solutions.

In addition to the above new wins, the Land Systems sector hit a major milestone with its first seaport contract to supply 80 automated guided vehicles to Singapore’s container port operator, PSA Corporation. The Marine sector was selected by Naval Sea Systems Command for a Phase One Preliminary/Contract design for the National Oceanic and Atmospheric Administration AGOR Variant, and the U.S. Navy exercised the option for the first of four Auxiliary Personnel Lighter (APL(S)) berthing barges, bringing the total number of APL(S) berthing barges to be constructed at the Group’s U.S. shipyard to three.

Significant Updates in April 2019 The Group has completed the acquisition of MRA Systemsii, LLC at a net consideration of about US$506m (approximately S$683m) on 18 April 2019 and is now focused on integrating the business with the Aerospace sector.

On 24 April 2019, the Group announced that the U.S. Department of the Navy has awarded its U.S. shipyard the Polar Security Cutter (PSC) contractiii. The contract includes options which, if exercised, would bring the cumulative value of this contract to about US$1.9b (about S$2.6b). The first PSC is expected to be delivered in 2024. ***

Page 3

ST Engineering is a global technology, defence and engineering group specialising in the aerospace, electronics, land systems and marine sectors. The Group employs about 22,000 people across offices in Asia, the Americas, Europe and the Middle East, serving customers in the defence, government and commercial segments in more than 100 countries. With more than 500 smart city projects across 70 cities in its track record, the Group continues to help transform cities through its suite of Smart Mobility, Smart Security and Smart Environment solutions. Headquartered in Singapore, ST Engineering reported revenue of $6.7b in FY2018 and it ranks among the largest companies listed on the . It is a component stock of the FTSE , MSCI Singapore, SGX ESG Transparency Index and SGX ESG Leaders Index.

For further enquiries, please contact:

Lina Poa Head, Corporate Communications & Investor Relations Tel: (65) 6722 1883 Email: [email protected]

Sylvia Lee Manager, Investor Relations Tel: (65) 6722 1849 Email: [email protected]

i http://www.stengg.com/en/newsroom/news-releases/st-engineering-positions-for-growth-in-satcom- market-with-offer-to-acquire-newtec-for-250m/ ii http://www.stengg.com/en/newsroom/news-releases/st-engineering-completes-acquisition-of-mra- systems-llc/ iii http://www.stengg.com/en/newsroom/news-releases/st-engineering-secures-up-to-s-26b-polar- security-cutter-contract-from-the-us-navy/

Page 4

FINANCIAL STATEMENTS FOR THE FIRST QUARTER ENDED 31 MARCH 2019

TABLE OF CONTENTS

Paragraph Description Page

FINANCIAL STATEMENTS AND RELATED ANNOUNCEMENT 1 – 22

1 CONSOLIDATED INCOME STATEMENT 1 – 3

2 BALANCE SHEETS 4 – 6

3 CONSOLIDATED STATEMENT OF CASH FLOWS 7 – 9

4 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 9

5 STATEMENT OF CHANGES IN EQUITY 10 – 14

6 AUDIT 14

7 AUDITORS’ REPORT 14

8 ACCOUNTING POLICIES 14

9 CHANGES IN ACCOUNTING POLICIES 14

10 REVIEW OF GROUP PERFORMANCE 15 – 16

11 VARIANCE FROM PROSPECTS STATEMENT 17

12 PROSPECTS 17

13 DIVIDENDS 17

14 BUSINESS SEGMENTAL INFORMATION 18 – 20

15 INTERESTED PERSON TRANSACTIONS 21

16 CONFIRMATION BY THE BOARD 21

17 CONFIRMATION OF DIRECTORS AND EXECUTIVE OFFICERS’ 22 UNDERTAKINGS PURSUANT TO LISTING RULE 720(1)

SINGAPORE TECHNOLOGIES ENGINEERING LTD UNAUDITED RESULTS FOR THE FIRST QUARTER ENDED 31 MARCH 2019

1 CONSOLIDATED INCOME STATEMENT FOR THE FIRST QUARTER ENDED 31 MARCH 2019

GROUP 1Q2019 1Q2018 +/(-) $'000 $'000 %

Revenue 1,731,305 1,646,564 5.1

Cost of sales (1,382,544) (1,320,657) 4.7

Gross profit 348,761 325,907 7.0

Distribution and selling expenses (46,616) (49,375) (5.6)

Administrative expenses (133,414) (122,207) 9.2

Other operating expenses (refer to para 1.6) (26,843) (32,204) (16.6)

Earnings before interest and tax 141,888 122,121 16.2

Other income 10,185 13,705 (25.7) Other expenses - (5,076) (100.0) Other income, net (refer to para 1.7) 10,185 8,629 18.0

Finance income 8,048 15,068 (46.6) Finance costs (8,962) (17,261) (48.1) Finance costs, net (refer to para 1.2) (914) (2,193) (58.3)

Share of results of associates and joint ventures, net of tax (refer to para 1.8) 8,783 15,424 (43.1)

Profit before taxation 159,942 143,981 11.1

Taxation (26,016) (23,949) 8.6

Profit after taxation 133,926 120,032 11.6

Attributable to: Shareholders of the Company 131,121 117,695 11.4 Non-controlling interests 2,805 2,337 20.0

133,926 120,032 11.6

Page 1 of 22

1(a) BREAKDOWN AND EXPLANATORY NOTES TO CONSOLIDATED INCOME STATEMENT

GROUP 1Q2019 1Q2018 +/(-) $'000 $'000 %

1.1 Earnings before interest and tax is arrived at after charging the following:

Depreciation and amortisation 75,417 57,185 31.9 The higher depreciation and amortisation in 1Q2019 was mainly attributable to the depreciation of right-of- use assets following the adoption of Singapore Financial Reporting Standards (International) (SFRS(I)) 16 - Leases on 1 January 2019.

Impairment loss on trade receivables and contract assets 434 989 (56.1) The lower impairment loss in 1Q2019 was due mainly to lower impairment loss from Aerospace and Electronics sectors, partially offset by higher impairment loss from Land Systems and Marine sectors.

Allowance for inventory obsolescence, net 10,482 10,625 (1.3) The allowance for inventory obsolescence in 1Q2019 was largely similar to 1Q2018.

1.2 Finance costs, net comprises: Interest income 4,582 5,920 (22.6) Foreign exchange gain, net 1,978 5,633 (64.9) Fair value changes of financial instruments / hedged items (486) (2,863) (83.0) Loss on disposal of investments, net - (476) (100.0) Interest expenses (7,152) (10,407) (31.3) Others 164 - NM (914) (2,193) (58.3) NM - Not Meaningful 1.3 Profit after taxation as a percentage of revenue 7.7% 7.3%

1.4 Profit attributable to shareholders as a percentage of share capital and 5.7% 5.1% reserves at end of the period

1.5 The Group’s tax charge in 1Q2019 included adjustments for underprovision of current tax of $0.5 million and overprovision deferred tax of $0.5 million in respect of prior years. (1Q2018: Adjustments for overprovision of both current tax and deferred tax of $2.8 million and $1.4 million respectively.)

1.6 The lower other operating expenses in 1Q2019 (by $5.4 million) was due mainly to lower research and development expenses.

1.7 The higher other income, net (by $1.6 million) was mainly attributable to absence of divestment loss arising from portfolio rationalisation activities in 1Q2018, partially offset by lower government grants. 1.8 The share of results of associates and joint ventures, net of tax, decreased (by $6.6 million) largely due to absence of contribution from Experia Events Pte. Ltd., the organiser of Singapore Airshow 2018.

1.9 There was no disposal of property during the period.

Page 2 of 22

1(b) BREAKDOWN OF REVENUE AND PROFIT FOR THE PERIOD

GROUP 2019 2018 +/(-) $'000 $'000 % Revenue reported for first quarter 1,731,305 1,646,564 5.1 Profit after taxation reported for first quarter 133,926 120,032 11.6

1(c) EARNINGS PER ORDINARY SHARE (EPS)

GROUP 1Q2019 1Q2018 FY2018

EPS based on profit attributable to shareholders: Cents Cents Cents

(i) Based on weighted average number of ordinary 4.20 3.78 15.85

shares on issue

(ii) On a fully diluted basis 4.18 3.76 15.76

Page 3 of 22

2 BALANCE SHEETS

GROUP COMPANY 31-Mar-19 31-Dec-18 31-Mar-19 31-Dec-18 $'000 $'000 $'000 $'000 ASSETS Non-current assets Property, plant and equipment 1,707,017 1,742,742 18,531 18,129 Right-of-use assets 427,958 - 362 - Subsidiaries - - 1,314,064 1,328,153 Associates and joint ventures 447,613 455,703 17,657 17,657 Investments 16,271 16,392 - - Intangible assets 1,141,058 1,151,238 - - Long-term trade receivables 1,189 1,172 - - Deferred tax assets 76,219 72,136 365 365 Amounts due from related parties 4,806 4,806 - - Advances and other receivables 10,488 20,074 - - Derivative financial instruments 15,334 11,483 - - Employee benefits - - - - 3,847,953 3,475,746 1,350,979 1,364,304 Current assets Contract assets 1,039,641 1,070,396 - - Inventories 1,133,098 1,183,510 - - Trade receivables 1,088,452 1,137,816 - - Amounts due from related parties 22,181 35,392 61,840 46,382 Advances and other receivables 239,393 253,961 2,676 9,170 Short-term investments 536 422 - - Bank balances and other liquid funds 609,893 415,780 84,879 273,456 4,133,194 4,097,277 149,395 329,008

TOTAL ASSETS 7,981,147 7,573,023 1,500,374 1,693,312

EQUITY AND LIABILITIES Current liabilities Contract liabilities 1,350,625 1,324,093 - - Deposits from customers 3,046 4,219 - - Trade payables and accruals 1,746,017 1,829,758 12,974 21,337 Amounts due to related parties 83,640 85,445 8,428 210,275 Provisions 212,648 212,935 - - Provision for taxation 178,759 163,232 1,400 4,518 Borrowings 194,417 225,416 118 - Deferred Income 2,002 3,761 - - Employee benefits 2,378 2,401 - - 3,773,532 3,851,260 22,920 236,130

NET CURRENT ASSETS 359,662 246,017 126,475 92,878

Page 4 of 22

2 BALANCE SHEETS (cont’d)

GROUP COMPANY 31-Mar-19 31-Dec-18 31-Mar-19 31-Dec-18 $'000 $'000 $'000 $'000 Non-current liabilities Contract liabilities 574,998 495,453 - - Trade payables and accruals 62,655 80,345 9,043 8,706 Amounts due to related parties - - 970 964 Provisions 16,414 - - - Deferred tax liabilities 169,677 170,726 - - Borrowings 613,332 270,363 207 - Deferred income 36,043 42,405 - - Employee benefits 105,924 108,016 - - Derivative financial instruments 25,223 19,842 - - 1,604,266 1,187,150 10,220 9,670

TOTAL LIABILITIES 5,377,798 5,038,410 33,140 245,800 NET ASSETS 2,603,349 2,534,613 1,467,234 1,447,512

Share capital and reserves Share capital 895,926 895,926 895,926 895,926 Treasury shares (3,325) (9,030) (3,325) (9,030) Capital reserves 112,898 118,174 (3,100) 2,199 Other reserves (129,498) (72,054) 51,091 65,054 Retained earnings 1,444,482 1,313,361 526,642 493,363 Equity attributable to owners of the Company 2,320,483 2,246,377 1,467,234 1,447,512 Non-controlling interests 282,866 288,236 - - 2,603,349 2,534,613 1,467,234 1,447,512

TOTAL EQUITY AND LIABILITIES 7,981,147 7,573,023 1,500,374 1,693,312

2(a) ANALYSIS OF BALANCE SHEETS

Compared to 31 December 2018, the Group’s total assets and total liabilities increased due mainly to recognition of right-of-use assets in accordance with SFRS(I) 16 Leases. The corresponding lease liabilities are included as part of borrowings.

Page 5 of 22

2(b) BORROWINGS

GROUP As at As at 31-Mar-19 31-Dec-18 $'000 $'000 Amount repayable within one year Secured 68,884 18,185 Unsecured 125,533 207,231 194,417 225,416

Amount repayable after one year Secured 412,565 77,341 Unsecured 200,767 193,022 613,332 270,363

Total 807,749 495,779

2(c) NET ASSET VALUE

GROUP 1Q2019 1Q2018 FY2018

Cents Cents Cents

Net asset value per ordinary share at end of the 74.34 74.57 72.00 period/year

COMPANY 1Q2019 1Q2018 FY2018

Cents Cents Cents

Net asset value per ordinary share at end of the 47.00 45.36 46.40 period/year

Page 6 of 22

3 CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE FIRST QUARTER ENDED 31 MARCH 2019

GROUP 1Q2019 1Q2018 $'000 $'000

Cash flows from operating activities Profit before taxation 159,942 143,981 Adjustments: Share of results of associates and joint ventures, net of tax (8,783) (15,424) Share-based payment expense 4,433 1,479 Depreciation charge 61,723 47,101 Property, plant and equipment written off 230 186 Amortisation of other intangible assets 13,694 10,084 Write-back of impairment loss on other intangible assets - (3) Gain on disposal of property, plant and equipment (290) (108) Loss on disposal of investments, net - 476 Loss on disposal of an associate - 324 Loss on disposal of subsidiaries - 4,752 Changes in fair value of financial instruments and hedged items 486 2,863 Interest expense 7,152 10,407 Interest income (4,582) (5,920) Dividends from investments (164) - Amortisation of deferred income (16) (16) Operating cash flow before working capital changes 233,825 200,182 Changes in: Inventories 45,945 27,122 Contract assets 29,050 (48,382) Trade receivables 45,071 57,190 Advance payments to suppliers (3,020) (4,040) Other receivables, deposits and prepayments 2,389 (14,037) Amount due from holding company and related corporations balances (4,927) 12,737 Amount due to holding company and related corporations balances (2,427) 1,599 Amount due from associates 7,843 8,509 Amount due from joint ventures 14,917 (5,286) Contract liabilities 107,335 147,093 Trade payables (35,219) 68,716 Deposits from customers (1,173) 665 Other payables, accruals and provisions (55,789) (19,829) Loans to staff and third parties (274) (5) Deferred income (632) 7,392 Foreign currency translation of foreign operations (3,355) (1,381) Cash generated from operations 379,559 438,245 Interest received 2,830 6,526 Income tax paid (13,088) (14,053) Net cash from operating activities 369,301 430,718

Page 7 of 22

3 CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE FIRST QUARTER ENDED 31 MARCH 2019 (cont’d)

GROUP 1Q2019 1Q2018 $'000 $'000

Cash flows from investing activities Proceeds from sale of property, plant and equipment 332 621 Proceeds from sale and maturity of investments - 27,400 Dividends from associates and joint ventures 16,329 5,956 Dividends from investments 164 - Purchase of property, plant and equipment (46,950) (44,730) Purchase of investments - (18,332) Investment in associates and joint ventures (1,636) (3,000) Additions to other intangible assets (18,722) (12,096) Net cash used in investing activities (50,483) (44,181)

Cash flows from financing activities Proceeds from bank loans 134,272 28,921 Repayment of bank loans (207,332) (85,972) Repayment of other loans - (142) Repayment of lease obligations (12,103) (162) Repayment of loan from a joint venture (4,000) (4,000) Purchase of treasury shares (17,798) - Capital contribution from non-controlling interests of subsidiaries 375 432 Dividends paid to non-controlling interests (4,600) (605) Interest paid (12,007) (15,931) Deposits (pledged)/discharged (3) 2 Net cash used in financing activities (123,196) (77,457)

Net increase in cash and cash equivalents 195,622 309,080 Cash and cash equivalents at beginning of the period 414,400 997,614 Exchange difference on cash and cash equivalents at beginning of the period (1,512) (3,799) Cash and cash equivalents at end of the period 608,510 1,302,895

Page 8 of 22

3(a) ANALYSIS OF CONSOLIDATED STATEMENT OF CASH FLOWS (cont’d)

The Group ended the quarter with cash and cash equivalents (CCE) of $609 million, $694 million lower than 1Q2018. In 1Q2019, the Group generated net cash of $369 million from its operating activities as compared to $431 million in 1Q2018. The lower net cash from operating activities was due to lower trade payables and other working capital movements, partially offset by higher operating cash flow before working capital changes generated in 1Q2019.

Net cash used in investing activities of $50 million in 1Q2019 arose mainly from the Group’s investment in property, plant and equipment by Aerospace ($24 million), Electronics ($12 million), Land Systems ($7 million), Marine ($2 million) sectors and Others ($2 million), and additions to intangible assets ($19 million), partially offset by dividends from associates ($16 million).

Net cash used in financing activities of $123 million in 1Q2019 was mainly attributable to the net repayment of bank loans ($73 million), purchase of treasury shares ($18 million) and repayment of lease obligations ($12 million).

4 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE FIRST QUARTER ENDED 31 MARCH 2019

The Statement of Comprehensive Income included as part of the results announcement is in compliance with the SFRS(I).

GROUP 1Q2019 1Q2018 +/(-) $'000 $'000 % Profit after taxation 133,926 120,032 11.6 Other comprehensive income Items that will not be reclassified to profit or loss Equity investments at FVOCI - net change in fair value 114 (12) NM Items that are or may be reclassified subsequently to profit or loss Debt investments at FVOCI - reclassified to income statement - (4,377) NM Net fair value changes of cash flow hedges reclassified to income statement (13,493) (2,613) 416.4 Effective portion of changes in fair value of cash flow hedges (9,969) 6,411 NM Share of net fair value changes of cash flow hedges of joint ventures (2,803) 199 NM Foreign currency translation differences (22,588) (6,061) 272.7 Share of foreign currency translation differences of associates and joint ventures 623 (602) NM Reserves released on disposal of subsidiaries - 4,752 NM Other comprehensive loss for the period, net of tax (48,116) (2,303) NM Total comprehensive income for the period, net of tax 85,810 117,729 (27.1) Total comprehensive income attributable to: Shareholders of the Company 86,887 114,042 (23.8) Non-controlling interests (1,077) 3,687 NM 85,810 117,729 (27.1)

Page 9 of 22

5 STATEMENT OF CHANGES IN EQUITY FOR THE FIRST QUARTER ENDED 31 MARCH 2019

Non- Share Treasury Capital Other Retained controlling capital Shares reserves reserves earnings Total interests Total equity Group $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000

At 1.1.2018 895,926 (22,870) 119,782 (67,480) 1,286,056 2,211,414 280,716 2,492,130 Total comprehensive income for the period Profit for the period - - - - 117,695 117,695 2,337 120,032 Other comprehensive income Net change in fair value - Equity investments at FVOCI - - - (12) - (12) - (12) Reclassified to income statement - Debt investments at FVOCI - - - (4,377) - (4,377) - (4,377) Net fair value changes on cash flow hedges - - - (2,613) - (2,613) - (2,613) Effective portion of changes in fair value of cash flow hedges - - - 5,735 - 5,735 676 6,411 Share of net fair value changes of cash flow hedges of a joint venture - - - 199 - 199 - 199 Foreign currency translation differences - - - (6,735) - (6,735) 674 (6,061) Share of foreign currency translation differences of associates and joint ventures - - - (602) - (602) - (602) Reserves released on disposal of subsidiaries - - - 4,752 - 4,752 - 4,752 Other comprehensive loss for the period, net of tax - - - (3,653) - (3,653) 1,350 (2,303) Total comprehensive income for the period, net of tax - - - (3,653) 117,695 114,042 3,687 117,729 Transactions with owners of the Company, recognised directly in equity Contributions by and distributions to owners of the Company Capital contribution by non-controlling interests ------432 432 Cost of share-based payment - - - 1,469 - 1,469 10 1,479 Treasury shares reissued pursuant to share plans - 15,639 (1,552) (14,023) - 64 (64) -

Total contributions by and distributions to owners of the Company - 15,639 (1,552) (12,554) - 1,533 378 1,911 Total transactions with owners of the Company - 15,639 (1,552) (12,554) - 1,533 378 1,911 Transfer from retained earnings to statutory reserve - - - 94 (94) - - - At 31.03.2018 895,926 (7,231) 118,230 (83,593) 1,403,657 2,326,989 284,781 2,611,770

Page 10 of 22

5 STATEMENT OF CHANGES IN EQUITY FOR THE FIRST QUARTER ENDED 31 MARCH 2019 (cont’d)

Non- Share Treasury Capital Other Retained controlling capital Shares reserves reserves earnings Total interests Total equity Group $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000

At 1.1.2019 895,926 (9,030) 118,174 (72,054) 1,313,361 2,246,377 288,236 2,534,613 Total comprehensive income for the period Profit for the period - - - - 131,121 131,121 2,805 133,926 Other comprehensive income Net change in fair value - Equity investments at FVOCI - - - 114 - 114 - 114 Reclassified to income statement - Net fair value changes on cash flow hedges - - - (13,580) - (13,580) 87 (13,493) Effective portion of changes in fair value of cash flow hedges - - - (8,240) - (8,240) (1,729) (9,969) Share of net fair value changes of cash flow hedges of joint ventures - - - (2,803) - (2,803) - (2,803) Foreign currency translation differences - - - (20,348) - (20,348) (2,240) (22,588) Share of foreign currency translation differences of associates and joint ventures - - - 623 - 623 - 623 Other comprehensive loss for the period, net of tax - - - (44,234) - (44,234) (3,882) (48,116) Total comprehensive income for the period, net of tax - - - (44,234) 131,121 86,887 (1,077) 85,810 Hedging gains and losses and cost of hedging transferred to the cost of inventory - - - 708 - 708 - 708 Transactions with owners of the Company, recognised directly in equity Contributions by and distributions to owners of the Company Capital contribution by non-controlling interests ------375 375 Cost of share-based payment - - - 4,423 - 4,423 10 4,433 Purchase of treasury shares - (17,798) - - - (17,798) - (17,798) Treasury shares reissued pursuant to share plans - 23,503 (5,276) (18,341) - (114) (78) (192) Dividends paid to non-controlling interests ------(4,600) (4,600) Total contributions by and distributions to owners of the Company - 5,705 (5,276) (13,918) - (13,489) (4,293) (17,782) Total transactions with owners of the Company - 5,705 (5,276) (13,918) - (13,489) (4,293) (17,782) At 31.03.2019 895,926 (3,325) 112,898 (129,498) 1,444,482 2,320,483 282,866 2,603,349

Page 11 of 22

5 STATEMENT OF CHANGES IN EQUITY FOR THE FIRST QUARTER ENDED 31 MARCH 2019 (cont’d)

Share-based Share Treasury Capital payment Retained capital Shares reserve reserve earnings Total equity Company $'000 $'000 $'000 $'000 $'000 $'000

At 1.1.2018 895,926 (22,870) 3,807 61,151 469,274 1,407,288 Total comprehensive income for the period Profit for the period - - - - 6,728 6,728 Total comprehensive income for the period - - - - 6,728 6,728 Transactions with owners of the Company, recognised directly in equity Contributions by and distributions to owners of the Company Cost of share-based payment - - - 1,479 - 1,479 Treasury shares reissued pursuant to share plans - 15,639 (1,556) (14,083) - - Total contributions by and distributions to owners of the Company - 15,639 (1,556) (12,604) - 1,479

At 31.03.2018 895,926 (7,231) 2,251 48,547 476,002 1,415,495

At 1.1.2019 895,926 (9,030) 2,199 65,054 493,363 1,447,512

Total comprehensive income for the period Profit for the period - - - - 33,279 33,279 Total comprehensive income for the period - - - - 33,279 33,279 Transactions with owners of the Company, recognised directly in equity Contributions by and distributions to owners of the Company Cost of share-based payment - - - 4,433 - 4,433 Purchase of treasury shares - (17,798) - - - (17,798) Treasury shares reissued pursuant to share plans - 23,503 (5,299) (18,396) - (192) Total contributions by and distributions to owners of the Company - 5,705 (5,299) (13,963) - (13,557)

At 31.03.2019 895,926 (3,325) (3,100) 51,091 526,642 1,467,234

Page 12 of 22

5(a) CHANGES IN COMPANY’S SHARE CAPITAL

Issued and paid up capital

As at 31 March 2019, the Company has an issued share capital of 3,122,495,197 ordinary shares (31 December 2018: 3,122,495,197 ordinary shares) of which 928,821 were held by the Company as treasury shares (31 December 2018: 2,701,198).

Number of Shares 1Q2019 As at beginning and end of the quarter 3,122,495,197 (including treasury shares)

As at end of the quarter (excluding treasury shares) 3,121,566,376

As at 31 December 2018 (excluding treasury shares) 3,119,793,999

Singapore Technologies Engineering Performance Share Plan 2010 (PSP 2010)

As at 31 March 2019, the total number of contingent shares granted conditionally but not released was 4,940,640 (31 March 2018: 4,882,392). Based on the achievement factor, the actual release of the awards could range from zero to a maximum of 8,399,088 (31 March 2018: 8,300,066) ordinary shares of the Company.

Singapore Technologies Engineering Restricted Share Plan 2010 (RSP 2010)

As at 31 March 2019, the total number of contingent shares granted conditionally but not released was 6,802,105 (31 March 2018: 5,264,379).

As at 31 March 2019, the total number of unvested awards was 7,457,078 (31 March 2018: 6,983,439) ordinary shares of the Company.

Treasury Shares

During the quarter, the Company purchased 4,800,900 ordinary shares by way of open market acquisitions, all of which were held by the Company as treasury shares (1Q2018: Nil).

During the quarter, 6,573,277 treasury shares were utilised pursuant to the PSP 2010 and RSP 2010 (1Q2018: 4,631,336).

As at 31 March 2019, the number of treasury shares held by the Company represented 0.03% (31 March 2018: 0.07%) of the total number of issued shares (excluding treasury shares).

Page 13 of 22

5(a) CHANGES IN COMPANY’S SHARE CAPITAL (cont’d)

Number of Treasury Shares for the Group and Company Quarter ended 31.03.2019 As at beginning of the year/quarter 2,701,198

Purchase of treasury shares 4,800,900

Treasury shares transferred on vesting of PSP 2010 (2,041,497)

Treasury shares transferred on vesting of RSP 2010 (4,531,780)

As at end of the quarter 928,821

6 AUDIT

The figures have not been audited or reviewed by the Company’s auditors.

7 AUDITORS’ REPORT

Not applicable.

8 ACCOUNTING POLICIES

Except as disclosed in paragraph 9 below, the Group has applied the same accounting policies and methods of computation in the preparation of the financial statements for the current reporting period as compared to the audited financial statements as at 31 December 2018.

9 CHANGES IN ACCOUNTING POLICIES

The Group has adopted Singapore Financial Reporting Standards (International) (SFRS(I)) 16 Leases, effective for the annual periods beginning on or after 1 January 2019.

SFRS(I) 16

SFRS(I) 16 introduces a single, on-balance sheet lease accounting model for lessee. A lessee recognises a right-of-use asset representing its right to use the underlying asset and a lease liability representing its obligation to make lease payments. Lessor accounting remains similar to the current standard – i.e. lessors continue to classify leases as finance or operating leases.

The Group applied the modified retrospective approach with no restatement of comparative information and the practical expedient for recognition exemptions for short-term leases and leases of low-value items.

On 1 January 2019, the Group recognised right-of-use assets of $432 million and lease liabilities of $404 million. The right-of-use assets included an amount of $28 million pertaining to reinstatement costs and prepaid leases.

The Group’s activities as a lessor are not material.

Page 14 of 22

10 REVIEW OF GROUP PERFORMANCE

10(a) Revenue

1Q2019 vs 1Q2018

$m 1Q2019 1Q2018 Increase/(Decrease) Aerospace 622 599 23 4% Electronics 563 605 (42) (7%) Land Systems 377 281 96 34% Marine 149 150 (1) (1%) Others 20 12 8 67% Total 1,731 1,647 84 5%

In 1Q2019, the Group delivered revenue of $1,731 million, an increase of 5% or $84 million as compared to 1Q2018. Aerospace and Land Systems sectors and “Others” reported higher revenue, partially offset by lower revenue from Electronics and Marine sectors.

Aerospace sector in 1Q2019 delivered higher revenue of $622 million, an increase of 4% or $23 million, as compared to 1Q2018. The increase was mainly attributable to higher revenue contribution from Component/Engine Repair and Overhaul and Engineering & Material Services business groups, partially offset by lower revenue from Aircraft Maintenance & Modification business group.

Electronics sector’s revenue of $563 million was lower as compared to 1Q2018 by 7% or $42 million due mainly to high base a year ago in 1Q2018 which was a strong quarter with 22% year-on-year growth.

In 1Q2019, Land Systems sector came in with revenue of $377 million, 34% or $96 million higher as compared to 1Q2018. The increase was contributed by all three business groups.

Marine sector’s revenue of $149 million was marginally lower by 1% or $1 million than that of 1Q2018. The decrease in revenue was mainly attributable to Shipbuilding, partially offset by better performance from Shiprepair and Engineering business groups.

Higher revenue under “Others” was mainly attributable to higher sales from Miltope.

Page 15 of 22

10 REVIEW OF GROUP PERFORMANCE (cont’d)

10(b) Profitability

1Q2019 vs 1Q2018

$m 1Q2019 1Q2018 Increase/(Decrease) Aerospace 62.7 59.2 3.5 6% Electronics 43.4 40.3 3.1 8% Land Systems 15.2 15.6 (0.4) (3%) Marine 12.0 8.7 3.3 38% Others (2.2) (6.1) 3.9 NM Total 131.1 117.7 13.4 11%

The Group ended the quarter with profit attributable to shareholders (Net Profit) of $131.1 million, an increase of 11% or $13.4 million as compared to 1Q2018. The increase was contributed by all sectors and “Others”, except for Land Systems sector which came in lower.

Aerospace sector’s 1Q2019 Net Profit of $62.7 million was 6% or $3.5 million higher than 1Q2018 as a result of higher revenue, absence of impact from portfolio rationalisation and lower tax expense, partially offset by unfavourable sales mix.

Electronics sector’s Net Profit of $43.4 million in 1Q2019 was an increase of 8% or $3.1 million as compared to 1Q2018. The increase was largely due to higher gross profit from favourable sales mix and share of lower losses from associates and joint ventures, partially offset by higher operating expenses and lower other income.

In 1Q2019, Land Systems sector’s Net Profit decreased by $0.4 million or 3% to $15.2 million, due mainly to unfavourable sales mix, higher operating expenses of robotics business, lower other income and higher tax expense from absence of favourable tax finalisation adjustment, partially offset by higher gross profit from higher revenue.

Marine sector’s 1Q2019 Net Profit of $12.0 million was 38% or $3.3 million higher than 1Q2018 largely due to improved U.S. shipbuilding performance, partially offset by higher tax expense.

“Others” incurred lower losses in 1Q2019 due mainly to absence of MTN interest expense and lower losses from Miltope, partially offset by absence of contribution from associate, Experia Events Pte. Ltd., the organiser of Singapore Airshow 2018.

Page 16 of 22

11 VARIANCE FROM PROSPECTS STATEMENT

No forecast was previously provided.

12 PROSPECTS

Group

The Group had a good start to the year and its recent contract wins have increased its order book to a high of $14.1b. The Group’s focus remains on strengthening its core businesses and pursuing growth in Smart City and in the international defence business.

On the M&A front, the Group have agreed to acquire Newtec Group, which operates in the high-tech satellite communications industry driving connectivity. This acquisition is expected to complete in 2H2019, and when combined with its existing satellite communications businesses, will further enhance its value proposition for Smart City.

This release may contain forward-looking statements that involve risks and uncertainties. These forward-looking statements reflect the Company’s current intentions, plans, expectations, assumptions and beliefs about future events. Actual future performance, outcomes and results may differ materially from those expressed in forward-looking statements as a result of a number of risks, uncertainties and assumptions. Representative examples of these factors include (without limitation) general industry and economic conditions, interest rate trends, cost of capital and capital availability, competition from other companies and venues for the sale/distribution of goods and services, shifts in customer demands, customers and partners, changes in operating expenses, including employee wages, benefits and training, and governmental and public policy changes, as well as natural disasters which may negatively impact business activities of the ST Engineering group. You are cautioned not to place undue reliance on these forward-looking statements, which are based on current view of management on future events.

13 DIVIDENDS

No interim dividend for the period ended 31 March 2019 is recommended.

Page 17 of 22

14 BUSINESS SEGMENTAL INFORMATION

By Business Activity

1Q2019 Land Aerospace Electronics Systems Marine Others Elimination Group $'000 $'000 $'000 $'000 $'000 $'000 $'000 Revenue External sales 622,086 563,158 377,415 149,093 19,553 - 1,731,305 Inter-segment sales 1,462 7,153 10,324 3 902 (19,844) - 623,548 570,311 387,739 149,096 20,455 (19,844) 1,731,305

Reportable segment earnings before interest and tax 63,859 52,293 16,175 13,840 (4,279) - 141,888 Other income 3,734 4,276 2,558 1,310 491 (2,184) 10,185 Other expenses (525) (4) (85) (16) (32) 662 - Finance income 6,137 808 665 920 14,216 (14,698) 8,048 Finance costs (7,029) (4,495) (2,935) (1,272) (7,929) 14,698 (8,962) Share of results of associates and joint ventures, net of tax 10,444 (689) 1,441 (316) (2,097) - 8,783 Profit before taxation 76,620 52,189 17,819 14,466 370 (1,522) 159,942 Taxation (11,103) (8,650) (2,754) (2,434) (1,075) - (26,016) Non-controlling interests (2,807) (182) 184 - - - (2,805) Profit attributable to shareholders 62,710 43,357 15,249 12,032 (705) (1,522) 131,121

Other assets 3,193,406 2,386,870 1,728,562 817,594 4,181,886 (4,774,784) 7,533,534 Associates and joint ventures 253,045 62,143 86,448 3,780 42,197 - 447,613 Segment assets 3,446,451 2,449,013 1,815,010 821,374 4,224,083 (4,774,784) 7,981,147

Segment liabilities 2,471,084 2,085,035 1,427,140 799,120 1,930,780 (3,335,361) 5,377,798

Capital expenditure 35,433 30,687 7,243 1,840 1,473 - 76,676 Depreciation and amortisation 33,079 19,488 12,490 8,316 2,875 (831) 75,417 Other non-cash expenses 187 - 43 - - - 230

Page 18 of 22

14 BUSINESS SEGMENTAL INFORMATION (cont’d)

By Business Activity

1Q2018 Land Aerospace Electronics Systems Marine Others Elimination Group $'000 $'000 $'000 $'000 $'000 $'000 $'000 Revenue External sales 598,611 604,468 281,196 149,922 12,367 - 1,646,564 Inter-segment sales 990 4,653 4,589 34 849 (11,115) - 599,601 609,121 285,785 149,956 13,216 (11,115) 1,646,564

Reportable segment earnings before interest and tax 69,360 46,650 11,251 7,820 (12,960) - 122,121 Other income 3,806 6,324 4,886 1,593 42,693 (45,597) 13,705 Other expenses (6,192) (49) (146) (7) (2) 1,320 (5,076) Finance income 3,475 635 656 662 31,564 (21,924) 15,068 Finance costs (4,432) (1,924) (1,609) (1,081) (24,149) 15,934 (17,261) Share of results of associates and joint ventures, net of tax 10,262 (3,299) 2,001 259 6,201 - 15,424 Profit before taxation 76,279 48,337 17,039 9,246 43,347 (50,267) 143,981 Taxation (14,945) (7,849) (1,448) (556) 849 - (23,949) Non-controlling interests (2,157) (177) (3) - - - (2,337) Profit attributable to shareholders 59,177 40,311 15,588 8,690 44,196 (50,267) 117,695

Other assets 2,898,570 1,985,521 1,557,798 891,582 5,233,930 (4,768,693) 7,798,708 Associates and joint ventures 251,844 51,423 110,303 10,745 28,486 7,327 460,128 Segment assets 3,150,414 2,036,944 1,668,101 902,327 5,262,416 (4,761,366) 8,258,836

Segment liabilities 2,128,403 1,718,729 1,330,069 778,282 3,005,430 (3,313,847) 5,647,066

Capital expenditure 29,230 16,896 6,448 1,346 1,833 - 55,753 Depreciation and amortisation 26,208 13,167 9,038 7,348 1,435 (11) 57,185 Write-back of impairment losses (3) - - - - - (3) Other non-cash expenses 123 4 5 - 54 - 186

Page 19 of 22

14 BUSINESS SEGMENTAL INFORMATION (cont’d)

By Business Activity

For Revenue and Net Profit of 1Q2019 vis-à-vis 1Q2018, please refer to paragraph 10.

Profit Before Tax 1Q2019 1Q2018 +/(-) $'000 $'000 % Aerospace 76,620 76,279 0.4 Electronics 52,189 48,337 8.0 Land Systems 17,819 17,039 4.6 Marine 14,466 9,246 56.5 Others (1,152) (6,920) NM Group 159,942 143,981 11.1

By Geographical Areas

Revenue 1Q2019 1Q2018 $'000 % $'000 % Asia 1,056,410 60.9 1,075,595 65.3 U.S. 341,973 19.8 308,184 18.7 Europe 215,799 12.5 175,135 10.7 Others 117,123 6.8 87,650 5.3 Total 1,731,305 100 1,646,564 100

By Country of Incorporation

Revenue 1Q2019 1Q2018 $'000 % $'000 % Asia 1,248,734 72.1 1,233,587 74.9 U.S. 309,672 17.9 267,038 16.2 Europe 149,397 8.6 126,587 7.7 Others 23,502 1.4 19,352 1.2 Total 1,731,305 100 1,646,564 100

Non-Current Assets + 1Q2019 1Q2018 $'000 % $'000 % Asia 1,881,139 50.1 2,050,099 56.8 U.S. 978,911 26.1 890,909 24.7 Europe 797,100 21.2 577,093 16.0 Others 99,250 2.6 92,682 2.5 Total 3,756,400 100 3,610,783 100

+ Non-current assets for the purpose of SFRS(I) 8 Operating Segments excludes derivative financial instruments, employee benefits and deferred tax assets.

Page 20 of 22

15 INTERESTED PERSON TRANSACTIONS (unaudited)

Aggregate value of all transactions conducted under a shareholders mandate pursuant to Rule 920 of the SGX Listing Manual

1Q2019 1Q2018 $'000 $'000 Transactions for the Sale of Goods and Services SATS Ltd. and its Associates 4,271 597 Limited and its Associates - 294 Singapore Telecommunications Limited and its Associates 120 448 StarHub Ltd and its Associates 378 - (Private) Limited and its Associates (non-listed) 43,265 16,521

48,034 17,860

Transactions for the Purchase of Goods and Services Mapletree Industrial Trust 11,851 - SATS Ltd. and its Associates 481 1,657 Industries Ltd and its Associates 3,200 1,953 Singapore Telecommunications Limited and its Associates 137 579 Temasek Holdings (Private) Limited and its Associates (non-listed) 3,345 9,402

19,014 13,591

Total Interested Person Transactions 67,048 31,451

16 CONFIRMATION PURSUANT TO RULE 705(5) OF THE LISTING MANUAL

The Board has confirmed that to the best of its knowledge, nothing has come to its attention which may render the unaudited interim financial results of the Group comprising the balance sheets (Group and Company), consolidated income statement, consolidated statement of comprehensive income, statement of changes in equity (Group and Company) and consolidated statement of cash flows and the accompanying notes for the first quarter ended 31 March 2019 to be false or misleading in any material respect.

Page 21 of 22

17 CONFIRMATION OF DIRECTORS AND EXECUTIVE OFFICERS' UNDERTAKINGS PURSUANT TO LISTING RULE 720(1)

The Company has procured undertakings from all its directors and executive officers in compliance with Listing Rule 720(1).

BY ORDER OF THE BOARD

KAREN NG KWEE LIAN Company Secretary 15 May 2019

Media Contact: Lina Poa Head, Corporate Communications & Investor Relations Tel: (65) 6722 1883 Fax: (65) 6720 2293 Email: [email protected]

Page 22 of 22